Fertilizers

SINGAPORE (ICIS)–Canadian ammonia exports are exempted from the prohibitively high levy imposed on Canadian exports to the US, thanks to the US-Mexico-Canada trade agreement. However, the trade tensions would inevitably motivate Canada to be less reliant on its closest neighbour market and accelerate diversification of its ammonia exports to Asia from the Prince Rupert Port in western Canada. Stronger push for Canada to diversify ammonia exports despite US tariff exemption Prince Rupert Port – an emerging low carbon ammonia export and bunkering hub US Gulf Coast low carbon ammonia projects to face strong competition Prince Rupert Port has the shortest shipping distances between North America and Asia hence its direct shipping route to Asia stands to undermine the competitiveness of low carbon ammonia exports from the US Gulf Coast. Besides comparatively longer shipping distances, shipments from the US Gulf Coast to Asia have also been faced with seasonal congestions at the Panama Canal. Key industry stakeholders in Japan and South Korea have been in talks with US companies to jointly produce low carbon ammonia in the US Gulf Coast States of Texas and Louisiana for export to Asia. Among the announced US projects, the joint venture between Japan’s largest energy company JERA Company (JERA), global investment and trading company Mitsui & Company and US fertilizer producer CF Industries have progressed to Final Investment Decision. The first ammonia exports from Prince Rupert Port to Asia are likely to be low carbon trades spearheaded by two of Japan’s largest trading houses Itochu and Marubeni. Low carbon ammonia exports from Prince Rupert Port would position Canada as a key stakeholder in an emerging low carbon commodity ecosystem comprising major bunkering hubs such as Amsterdam, Algeciras, Singapore and Port Zayed, key exporters including the UAE, Saudi Arabia, Qatar, Oman, Egypt, India, Malaysia, Thailand, Indonesia, Australia and the US, and importers including countries in Europe, Japan and South Korea (please see map below). Note: Includes proposed and ongoing investments Low carbon ammonia supplies via the Prince Rupert Port will also facilitate development of a low carbon marine fuel bunkering service that could potentially be in direct competition with the proposed low carbon bunkering services at the US ports of Los Angeles and Long Beach. Demand for low carbon ammonia bunker fuels on the US west coast is expected to be driven by car-carrying vessels calling at Port Bernicia and container vessels at Port Oakland. The Canadian government has been inviting foreign investments to develop a new liquid chemicals export route from the Prince Rupert Port as the port has been seeing declining trades volumes in recent years due to shifting global trade flows and competition with other North American ports. AltaGas and Royal Vopak are jointly building an export facility on the Ridley Island, British Columbia, that includes a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics and marine infrastructure. As vessels can be configured to alternate between LPG and ammonia cargoes, ammonia can be one of the outbound trades to benefit from the export facility at Ridley Island. While diversifying overseas markets to pre-empt risks, including tariff or non-tariff trade barriers, would make sense for any exporters, it is particularly crucial for ammonia producers as stringent safety standards for the transportation and handling of ammonia means alternative export channels are not easily set up. Canada exported about 1.08 million tonnes of ammonia to the US last year, around 19% of its total annual ammonia capacity of about 5.62m tonnes, and almost all Canadian ammonia exports have been for the US market at least since 2020, according to the ICIS Supply and Demand database. With contributions from Kieran Cosgrove, Song Hea Beom and Sylvia Traganida INSIGHT article by Chow Bee Lin

25-Apr-2025

MUMBAI (ICIS)–Two oil refineries will be built in India as part of Saudi Arabia’s $100-billion investment pledged to the south Asian nation which would cover cooperation in multiple areas, including energy and petrochemicals. High-level joint task force finalizes plans for joint cooperation in multiple sectors Both countries to develop supply chains, projects linked to energy sector Green hydrogen infrastructure collaboration plans on The projects, which will be built in partnership with the Indian government, and agreements to enhance cooperation with the world’s biggest crude exporter across various industries were announced on 22 April, during a state visit by Indian Prime Minister Narendra Modi to Saudi Arabia. Collaborations are also planned in the pharmaceuticals, infrastructure, technology, fintech, digital infrastructure, telecommunications, manufacturing and health sectors, among others, according to a statement from the Prime Minister’s Office (PMO) of India on 23 April. In 2023, the two countries agreed to set up a joint committee to expedite Saudi Arabia’s $100-billion investments in India which was announced in February 2019. A high-level task force set up by the two countries has now finalised plans in multiple areas which will allow both countries to begin work soon, the PMO stated. The countries will also work towards developing supply chains and projects linked to the energy sector, it added. The two nations have agreed to enhance cooperation in the supply of crude oil and its derivatives, including liquefied petroleum gas (LPG), the government statement said, adding that collaborations in the field of green hydrogen, including developing hydrogen transport and storage technologies, would also be explored. Saudi Arabia is India’s fourth largest trading partner and is the third largest exporter of crude oil to the south Asian country. In the fiscal year ending March 2024, India’s goods imports from Saudi Arabia stood at $31.4 billion, while exports to the nation were at around $11.6 billion, official data showed. Its major exports to Saudi Arabia include petroleum products, engineering goods, rice, chemicals, textiles, food products while imports from Saudi include crude oil, liquefied petroleum gas (LPG), fertilisers, chemicals, plastics, among others. RATNAGIRI MEGA REFINERY PROJECT IN QUESTION About seven years ago, Saudi Arabia signed a deal with Indian refiners to build a mega refinery and petrochemical complex in the west coast of India, but the project hit a snag. The 60 million tonne/year project in the Maharastra state which was estimated to cost $44 billion to build was supposed to be commissioned by 2022, faced delays due to land acquisition problems. Opposition to the project continues and there has been no breakthrough in discussions with villagers in the area. There was no official announcement from the central government on the fate of the proposed Ratnagiri mega-refinery and petrochemical project. Maharashtra chief minister Devendra Fadnavis, in a February 2025 interview at an Indian daily Economic Times, had said that instead of one mega refinery project, three small ones will be built – one in Ratnagiri and the other two will be in two other states in southern India. The refineries will each have a 20 million tonne/year capacity, he said. Indian petroleum minister Hardeep Singh Puri in January this year announced plans to build smaller refineries at different locations in the country. Focus article by Priya Jestin

24-Apr-2025

MUMBAI (ICIS)–State-owned National Fertilizers Ltd (NFL) plans to acquire an 18% stake in a proposed joint venture (JV) that will build a 1.27 million tonne/year urea plant at Namrup in India’s eastern Assam state. NFL plans to invest Indian rupees (Rs) 5.72 billion ($67 million) in the Namrup IV Fertilizer Plant, the company said in a disclosure to the Bombay Stock Exchange (BSE) on 18 April. The state government of Assam will hold a 40% stake in the proposed joint venture; with NFL and Oil India Ltd (OIL) each holding an 18% stake. Hindustan Urvarak & Rasayan Ltd (HURL) will own 13% and Brahmaputra Valley Fertiliser Corp (BVFCL) will have the remaining 11%. The project, which will be set up within the complex operated by BVFCL, is expected to cost Rs106 billion, it added. The plant is expected to be commissioned within 48 months of the project launch, NFL said, adding that once operational, the plant will help meet the growing demand for urea in northeast India. The Indian government approved the proposal for the new project on 19 March 2025 as part of its effort to reduce urea imports. Indian finance minister Nirmala Sitharaman had announced the project during her budget speech on 1 February 2025. It will be the eighth plant with the same capacity that will be built in the south Asian country since 2019. ($1 = Rs85.12)

21-Apr-2025

SAO PAULO (ICIS)–Brazil's chemicals industry is facing its worst performance in 30 years, with the producing companies in the sector operating at just 60% of installed capacity during January and February, the country’s trade group Abiquim said. According to the Abiquim-Fipe Economic Monitoring Report (RAC), all key indicators showed a decline in the two-month period, year on year: production fell by 5.6%, domestic sales dropped 0.8%, and national demand for industrial chemical products decreased by 4.0%. As domestic producers' market share diminishes, imports continue reaching Brazil’s shores at pace, with the country’s chemicals trade deficit continuing to increase. In the 12 months to February 2025, it reached $49.59 billion, up from $48.68 billion in the same 12-month comparable period a year prior. Imports now represent 49% of total domestic demand, with significant increases in thermoplastic resins (28.3%), other inorganic products (26.7%), and organic chemicals (25.1%). IDLENESSChemical plants’ 40% idleness average level in January-February was the worst recorded since data collection began in 1990, said the trade group, which represents mostly chemicals producers. Some product groups posted even higher idleness rates, such intermediates for fertilizers (44%), intermediates for plastics (48%), intermediates for synthetic fibers (41%), and intermediates for plasticizers (61%). February’s results were particularly concerning, with production plummeting 10.1% compared to January, domestic sales decreasing 4.5%, and national apparent consumption dropping 17.1%. Abiquim said companies attributed this poor performance to operational problems, idle units, plants in hibernation, low demand, raw material restrictions, electricity supply variations, and fewer operating days in February. Despite the clouds, prices for chemical products rose 5.1% between January and February 2025, with real prices increasing 3.6% when accounting for inflation. In dollar and euro terms, real prices are 11.3% and 11.2% higher, respectively, compared to 2024. Abiquim’s executive president, Andre Passos, preferred to see the glass half full – despite all evidence pointing to it being half empty – and said two state programs for the chemicals sector had the potential to turn things around by the end of this decade and “save” Brazilian chemicals. Passos said the breaks on some input materials, called REIQ, including provisions linking tax incentives to investments, was a re-implementation linked to investments to create new or expand existing capacities. Passos added that, only in 2025, companies could invest up to Brazilian reais (R) 1 billion thanks to the provisions included in the REIQ bill. ‘SAVE THE SECTOR’This week Abiquim focused on another bill, the Special Program for Sustainability of the Chemical Industry (Presiq). The Presiq acronym may be heard more often from now on if what Abiquim’s Passos said about it comes to pass – if implemented in full and correctly, Presiq could become the savior the struggling chemicals industry has for years been looking for. Earlier in April, Brazil’s parliament passed what could be considered the country’s response to the EU Green Deal or to the US IRA, now in danger of extinction: widespread tax incentives for companies going greener and embracing low-carbon processes and technologies. Presiq itself is an ambitious project which, beyond attracting more low-carbon investments, aims to bring the sector to near full capacity, targeting 95% utilization rates by the end of this decade. Presiq has two financial lines – one aimed at credits for the purchase of less polluting inputs and raw materials, such as natural gas versus other more polluting fossil fuels; secondly, the program will offer investment credits of up to 3% of invested value for petrochemical plants and chemical industries committed to expanding installed capacity. Starting in 2027, Presiq budgeted up to R4 billion for financial credits, and up to R1 billion for investment credits. “The Brazilian chemical sector is facing a delicate moment, aggravated by the trade war between the US and China. The government must take urgent measures to strengthen the national chemical industry, just as its international competitors have done with incentive programs,” said Passos. "The new law [Presiq] will help reduce the deficit in the chemical industry, and it could become an important source of revenue. It will also add value to the country through the sustainable use of natural resources. This plan can save the sector." Front page picture: Chemicals facilities in Brazil Source: Abiquim ($1 = R5.93)

16-Apr-2025

SINGAPORE (ICIS)–Arab Gulf (AG) ammonia annual average export price is forecast to ease further this year (see Chart 1) as producers are expected to keep prices competitive to maintain market shares in Asia, particularly as weak Asian demand for industrial applications including acrylonitrile (ACN) and caprolactam (capro) have capped ammonia prices. AG ammonia producers are expected to maintain its export prices in 2025 at just below parity with southeast Asian producer with FOB AG at around 97% of FOB SE Asia prices (see Chart 2) to optimize returns while keeping market shares in their key India and Taiwan markets. AG ammonia producers’ netbacks in Taiwan and India in 2025 are projected to return to levels similar to 2020 before the Russian-Ukraine war with AG FOB at around 89% and 84% of CFR Taiwan and CFR India prices, respectively (see Chart 3) Asia remains an important market for AG producers particularly when their returns from Europe have been shrinking. AG ammonia producers’ FOB netbacks from Europe is expected to remain constrained in 2025 with the FOB AG annual price hovering at around 63% of the CFR NWE annual price, following two years of higher returns in 2022 and 2023. (see Chart 4) AG ammonia producers have not been exporting much to Europe except for 2022 and 2023 when outbreak of the Russia-Ukraine conflict and subsequent sanctions on Russian exports created a window of opportunity for AG producers. (See Chart 5) Europe ammonia import prices are expected to remain elevated as high natural gas prices had led several ammonia plants in the region to be permanently shut in 2022, with the ammonia prices remaining tied to the prices of key exporters Trinidad and Algeria. Egypt also exports ammonia to Europe, but its production has been susceptible to disruptions caused by natural gas shortages as seen in Q3 last year and February this year. Europe import prices are expected to ease if Russia resumes exports to Europe hence a burning question for importers is when Togliattiazot’s (TOAZ's) export terminal at Russia’s Taman Port would start loading ammonia. TOAZ is part of the Uralchem Group, and the terminal was expected to start loading ammonia in Q1 this year. Ammonia is a feedstock for inorganic fertilizers such as urea and ammonium sulphates and chemicals such as acrylonitrile (ACN). With contributions from Song Hea Beom, Sylvia Traganida

28-Mar-2025

SINGAPORE (ICIS)–A significant number of solar and wind renewable power projects being planned or under development in China integrated with downstream production of “green” ammonia points to potentially heightened dynamics between renewable power and low-carbon ammonia within China, and by extension, in Europe. Some of China’s key green ammonia producers are eyeing the European market. China develops ammonia capacity to store renewable power Around 7 million tonnes of green ammonia projects to start up in China by 2030 – ICIS Chinese low carbon ammonia export to extend cross-sector impact to Europe “Green” ammonia refers to ammonia produced from solar or wind renewable power. China’s current five-year economic development plan which started in 2021 (14th five-year plan) encourages investments in diversified energy storage technologies, including megawatt-capacity fuel cells, metal–air electrochemical cells and hydrogen-ammonia energy storage. Energy storage solutions can counter impact of the inherently intermittent nature of solar and wind power. More than 9 million tonnes/year of green ammonia projects have been announced in China since 2020, of which around 7 million tonnes are expected to start up by 2030, ICIS data show. Majority of the investors in these green ammonia projects are state-owned companies from the Chinese power sector, with the rest from adjacent industries including steel, shipping, coal, electrolyzers and wind turbines manufacturing, as well as heavy industry machinery. CROSS-SECTOR PRICING DYNAMICSImplications of the potential cross-sector pricing dynamics were not lost on the Chinese economic and energy regulators. China’s top economic regulator, the National Development and Reform Commission (NDRC), and its Energy Bureau announced a new pricing mechanism for solar and wind renewable power on 9 February this year. Part of the new mechanism called for provincial regulators to set floor prices for domestic spot power markets in consideration of the potential returns that these renewable power providers can obtain outside the power market. With the slew of renewable power integrated with ammonia-as-energy-storage projects in the pipeline, green ammonia could potentially be one of those non-power-sectors that generate returns for the renewable power producers. Under the new mechanism, solar and wind power scheduled to start up after 1 June 2025 will be subject to feed-in tariffs (FITs) determined by voluntary industry bidding processes rather than FITs pegged to domestic coal power prices, a development widely seen as a step toward market-oriented power pricing. Renewable power providers selected in the bidding processes will obtain payouts from state-run grid operators if the power prices they obtain from the domestic spot market are below the FITs, and vice versa. The levels of FIT bids from renewable power providers inevitably would be influenced by their potential non-power-sector returns, hence aligning the floor prices of spot power markets to those returns could serve to prevent unnecessarily large amount of fund transfers between grid operators and renewable power operators. China’s power spot markets also feature price ceilings set by provincial regulators and the central government has called for these to be set considering the peak load price levels that industrial and commercial end-users pay. GREEN AMMONIA’S VARIED APPLICATIONS In February, the central government also called for ending inappropriate interventions in domestic electricity markets, such as setting energy storage as a pre-requisite for approving renewable power projects or their grid connections, and to diversify energy storage to include other technologies including sodium-ion, flow, lithium and lead-carbon batteries. Investor enthusiasm in green ammonia as an energy storage medium may ease as a result, but as a longer-term investment, ammonia remains promising due to its varied applications. Ammonia is a primary feedstock for inorganic fertilizers and chemicals production, and potentially a medium for shipping hydrogen to overseas markets. Last October, the Shuimu Mintal Damao project of Chinese state-owned company Mintal became the first in China to receive a TUV Rheinland pre-certification for green/renewable hydrogen and its derivative green/renewable ammonia, in compliance with the TUV Rheinland H2.21 v2.1 standard, based on the EU Renewable Energy Directive III (RED III). This certification, which demonstrates that the project design complies with the EU Renewable Energy Directive for renewable fuels of non-biological origin (RFNBO), may pave the way for a steady flow of green/renewable ammonia exports from China to Europe. Insight article by Chow Bee Lin With contributions from Song Hea Beom

24-Mar-2025

HOUSTON (ICIS)–The Fertilizer Institute (TFI) said it is extending a sincere thanks to US President Donald Trump for including potash alongside critical minerals in the most recent executive order titled “Immediate Measures to Increase American Mineral Production.” The industry group said this designation sets into place a framework to ensure that potash and other national critical mineral resources are leveraged to create jobs and fuel American prosperity. For fertilizers it will help ensure a stable and abundant supply, which are critical to maintaining global competitiveness of US farmers, strengthening rural economies and keeping food prices in check. “Originally included in the first list of Critical Minerals created in 2018 under President Trump’s first administration, potash’s omission from the 2022 list was a mistake that a broad coalition of industry and consumer advocates have been working to remedy,” said Corey Rosenbusch, TFI president and CEO. TFI noted that 98% of annual US potash consumption comes from imports. Despite having natural reserves, the U.S. only accounts for 0.2% of global supply. There are additional seams that remain unmined due to regulatory uncertainty that has resulted in delayed permitting. Part of the regulatory uncertainty stems from a lack of clarity on potash’s critical mineral status. “We look forward to continuing to work with the Trump Administration on actions that will promote a strong and resilient fertilizer industry that supports U.S. agriculture and ensures affordable food prices for American families,” Rosenbusch said. “This includes continued engagement with the United States Geological Survey (USGS) with the goal of expanding on the executive order to ensure the permanent recognition of both potash and phosphate in their rightful place on the Critical Minerals list.”

21-Mar-2025

TORONTO (ICIS)–Canada’s central bank will work to ensure that US tariffs, and Canada’s reciprocal duties, will not turn into an inflation problem, the bank’s governor said during a webcast event on Thursday afternoon. Monetary policy cannot solve a trade conflict Tariffs to impact oil, farming, manufacturing Tariffs are a structural change that needs a structural response While the tariffs will slow Canada’s GDP growth and raise prices, the tariff-induced direct price increases must not be allowed to spread into “ongoing generalized inflation”, Tiff Macklem, governor of the Bank of Canada, said in a speech to the Calgary economic development agency in Alberta. US tariffs on Canadian exports will be paid by the US company buying those goods, and the company will pass at least some of the cost onto the US consumer, Macklem said. However, the same goes for the retaliatory tariffs Canada imposes on goods imported from the US, he said. As such, higher tariffs will raise prices, causing inflation to rise for a period as the upward pressure on prices from higher costs will outweigh the downward pressure from a weaker economy, he said. Businesses have already lowered their sales outlooks, notably in manufacturing and sectors that depend on consumer spending, he said. Companies are also holding back on investment plans. “Businesses are telling us they are delaying or cancelling investments and scaling back on hiring,” Macklem said. However, as Canadians worry about trade uncertainty, “we don’t want them to have to worry about inflation as well”, he said. What the bank can and must do is ensure that higher prices from a trade conflict do not become ongoing inflation, he said. “We are committed to maintaining price stability over time,” he said, adding: “There should be no uncertainty about that.” The tariffs and resulting uncertainties will – if maintained – particularly hurt certain sectors and regions in Canada, he said. ENERGY For oil-rich Alberta province, the impact on the energy industry from a 10% US tariff is “a major concern”. At the same time, however, the tariffs are also “a big issue” for US Midwest refineries that have invested in equipment to refine heavy Canadian oil, he said. About 94% of Canadian crude oil exports go to the US, mostly through north-south pipelines, he said. The launch of the Trans Mountain oil pipeline expansion last year increased access to overseas markets for Canadian oil, and new export capacity for liquefied natural gas (LNG) is due to come online, he noted. These capacities would help to diversify markets for Canadian energy exports, he said, but also pointed out that these investments are designed to increase Canada’s export capacity – not replace US demand, he said. FERTILIZERS Although the US has temporarily exempted fertilizers, including potash, from tariffs, “uncertainty remains,” he said. With spring seeding to begin soon, farmers on both sides of the border are already feeling pressure from low grain prices, he said. US farmers import potash from Saskatchewan to add potassium to their soil, while Canadian farmers often need US phosphate to fertilize their crops, he said. Canadian farmers also buy machinery and equipment from the US, he said. He also noted that China has imposed a 100% tariff on Canadian canola, effective 20 March, in retaliation for the 100% tariff Canada placed on electric vehicles (EVs) from China. China is the top market for Canadian canola, with an export value of close to Canadian dollars (C$) 5 billion ($3.5 billion), he said. ALUMINUM, STEEL Industries in other parts of Canada, particularly in Ontario and Quebec, will be disrupted by the 25% US tariffs on steel and aluminum. In 2024, the US imported about one-quarter of its steel and 40% of its aluminum from Canada, and Canada imported one-quarter of its steel and one-fifth of its aluminum from the US, he said. Those cross-border flows mean these sectors will be hit by both US tariffs and counter-tariffs, he said, adding: “It’s going to hurt output and increase prices.” Monetary policy could not target specific industries or regions, he said. “We have one monetary policy for the whole country,” he said. A challenge for the Bank of Canada will be trying to assess by how much tariffs will dent demand, how much of the tariff burden will be passed on to consumer prices, and how quickly the burden will be passed on, he said. A faster pass-through means inflation will rise faster, but it will also come down faster, “provided monetary policy does its job”. “So, we’re watching closely how the costs of tariffs and uncertainty pass through to consumer prices,” he said. “Our mandate is price stability, and low inflation is the best way we can support the economic and financial well-being of Canadians in good times and bad,” he said. While monetary policy “cannot solve a trade war”, the bank could help avoid adding damage to the economy by ensuring that inflation remains anchored at the bank's 2% inflation target, he said. Helping the Bank of Canada will be its co-operation with central banks around the world, he said. Central bank governors meet regularly to exchange information and consult each other, he said. “As central banks, we are all in this together,” Macklem said. STRUCTURAL CHANGE If not resolved, Canada’s tariff conflict with its largest trading partner by far would become a “structural change” that requires a structural solution, Macklem said. High tariffs would put Canada on a permanently lower growth path, he said. “We are going to earn less, we are going to consume less, because we are going to have less income,” he said. One way to at least partially offset the negative structural change caused by the tariff conflict would be “positive structural reform”, he said. Such a reform would include removing the barriers to the country’s interprovincial trade, he said. Despite many attempts over the years, Canada never agreed on interprovincial free trade as in many cases it is easier to trade north to south, rather than across Canada. The barriers between the country's 10 provinces and three territories include actual trade restrictions, as well as different provincial regulations for the accreditation of professionals, Macklem said. With the tariff conflict, Canada may now finally remove its interprovincial barriers, which would increase commerce east-west across the country, he said. This positive structural reform could offset “at least some of the consequences of this very negative structural shock we are facing with the US,” he said. It would, however, be difficult and take time for Canada to try to replace the millions of US consumers it may be losing, he said. While hoping for the best, Macklem did not seem too optimistic about the chances of resolving the tariff conflict with the administration of US President Donald Trump. “There is a certain level of trust that has been broken,” he said, and he noted that “Trump has threatened our sovereignty, repeatedly referring to Canada as the 51st state.” Regarding Canada's upcoming federal election, Macklem said the bank's commitment to low inflation was independent of which political party is in government. Canada’s new prime minister, Mark Carney, is expected to call an election on Sunday (23 March), which will likely be held on 28 April or 5 May, public broadcaster CBC reported on Thursday, citing unnamed government sources. Carney, who took over from Justin Trudeau on 14 March, is a former governor of the Bank of Canada and of the Bank of England. CHEMICAL INDUSTRY Trade group the Chemistry Industry Association of Canada (CIAC) has said that to cope with the tariff challenge, Canada needs a competitiveness framework to attract investment and stimulate economic growth. CIAC wants the government to implement pro-growth tax and regulatory policies; strengthen the country’s infrastructure; improve labor relations to avoid supply chain disruptions; and help diversify and expand Canada’s trade into new markets beyond North America. In chemicals and plastics, the tariff conflict affects about C$115 billion in US-Canada chemicals and plastics trade, according to CIAC. Focus article by Stefan Baumgarten $1 = C$1.43 Please visit US tariffs, policy – impact on chemicals and energy Tumbnail photo of Tiff Macklem, governor of the Bank of Canada; photo source: Bank of Canada

21-Mar-2025

HOUSTON (ICIS)–The Fertilizer Institute (TFI) is recognising US President Donald Trump for signing an executive order, which the industry group said continues his long-standing recognition of the importance of fertilizers to farmers and the domestic agriculture economy. The industry group added that the president’s action ensures that Canadian and Mexican imports of fertilizers that fall US-Mexico-Canada Agreement (USMCA) rules of origin preference status will be subject to no duty while this round of tariffs remains in effect. Additionally, the executive order further establishes that potash imports from Canada and Mexico lacking USMCA preference status will be subject to a reduced import tariff of 10%. There is sentiment a large percentage of the need for potash supply to start spring is already in place, with January imports from Canada higher, which reflects the urgency the fertilizer industry undertook ahead of any trade measures. It is possible fertilizer inventory, especially potash, in some locations can go through the whole season. The wider concern is more over ensuring there is enough product for summer refilling efforts and potential, weather permitting, fall applications after crop harvest is concluded. TFI said this is an important step forward to ensuring a stable and affordable supply of fertilizers which are critical to maintaining the global competitiveness of US farmers, strengthening rural economies and keeping food prices in check. “President Trump has long been supportive of US farmers and rural communities,” said Corey Rosenbusch, TFI President and CEO. “As the important spring planting season kicks off on farms around the country, the president’s recognition of the critical nature of fertilizers will ensure growers have access to the vital crop nutrients that make possible bountiful harvests and profitable grower operations.”

07-Mar-2025

SAO PAULO (ICIS)–Brazilian chemicals players are increasingly concerned about shooting costs in logistics as an already two-month long strike by customs workers is set to continue. – Strikes started in mid-2024 bear no fruit – unions double down – Government may need to act more forcefully to ease flows of special materials – Implementation of new simplified import system could derail if strike prolongs Several rounds of talks between the union representing tax auditors and the government have so far failed to bear fruit. Some chemicals players are already facing trouble with perishable goods or materials which need quick delivery – pharmaceuticals, food products, and the like – and are openly demanding a tougher approach from the government. The trade group Brazilian Association of Distributors of Chemical and Petrochemical Products (Associquim) said to ICIS the long-running dispute will need to differentiate between those perishable goods and the rest, arguing it will fall on the government to be more forceful about the delivery of such goods. For the moment, chemicals players on the plastics transformer side, represented by trade group Abiplast, or production players represented by Abiquim, have not reported significant trouble in their trade. However, Abiquim warned that a prolonged strike could negatively hit the current implementation phase of a new import system which was due to simplify the process and save logistics costs for companies. For the moment, no side is backing down. President Luiz Inacio Lula da Silva’s cabinet is aiming to tighten the state's belt as investors’ worries about the fiscal deficit sent Brazilians assets sharply down by the end of 2024, a situation which is now normalizing. The current strike is just the last industrial action in a long list which started in mid-2024 with smaller strikes. As well as salary demands, the trade union is also asking for better working conditions, including the maintenance and upgrades at the many ageing customs points across Brazil’s wide geography. GOVERNMENT INTERVENTIONIn an interview with ICIS on Friday, the president of Associquim said the strike is already hitting some of the trade group’s member companies. Rubens Medrano said the situation is becoming as critical as likely to require government-mandated work shifts for clearance special goods such as those going into the food or pharmaceutical sectors. “We have chemical products that have to have a special place for storage, for instance, and if too much accumulates in those special storage places, then it will filter down to the end-user, and create a safety problem. It would be good if the government used the inspectors' criteria to release these materials, as they do with essential products,” said Medrano. “Because, after all, these products have an expiration date and require special handling and storage. Our request to the cabinet is that this takes priority, immediately. We understand the strike, they have the right to demand their rights, but we also ask that these particularities are taking into consideration and release critical chemicals.” This cabinet intervention is likely to be needed as the effects of another, larger action by workers filters down to all users. As talks have so far failed to deliver an agreement, the union doubled down on 12 February when it started a two-week “zero clearance period” in which practically no physical inspection is carried out. In fact, earlier in February logistics company Unishipping said the “zero clearance period" may end up causing the need for judicial intervention in all the cases where special materials are involved. “Brazil’s Superior Courts have ruled that industrial action cannot entirely paralyze essential public services (as perishable cargoes). Judicial intervention may be necessary to ensure the continuity of critical operations on a case-by-case basis,” said Unishipping in a letter to its customers seen by ICIS. In his usually optimistic and conciliatory tone, Medrano said judicial intervention should “be the last resort” to resolve the cases of special materials, adding in his plea for “an understanding among the inspectors” about the key costs associated with delays in deliveries of special materials. For non-special products, delays have been reported but nothing that for the moment has jeopardized production in end manufacturing customers. What is clearly by now, said Medrano, is that it is causing an increased costs for anyone in the import or export market. “Th strike is disrupting the entire logistics about imports, since imports are planned in the long term. But this is not only a logistics problem as we must reorganize them, but also a cost problem: goods stuck in ports means higher costs for the importer,” concluded Medrano. Medrano’s plea echoed those of other manufacturing players, not least transport players who after two months of continued industrial actions are the ones most feeling the pinch. Earlier this week, the trade group Union of Cargo Transport Companies of Sao Paulo State (SETCESP), Brazil’s most industrious, said the strike was causing “significant” disruption. Sao Paulo state is home to the Port of Santos, Latin America’s largest, a key exit and entry point for some chemicals and a wide range of industrial goods, as well as of the fertilizers that are paramount to feed Brazil’s powerful agricultural sector. NEW IMPORT SYSTEM IMPLEMENTATION, CHALLENGEDThe major industrial action among customs workers was called at a time when their jobs are more vital than ever as Brazil implements a new import system which was expected to greatly cut delivery times and save costs for companies. The so-called New Import Process on the Single Foreign Trade Portal was approved by President Luiz Inacio Lula da Silva’s cabinet in 2023, with implementation in three phases, with the third and most critical due to take place in the second half of 2025. While July is still a long way away, the smaller strikes in mid-2024 and the current all-out stoppage by workers have made some players fear the work conflict may not be resolved by then, when customs workers will be more needed than ever if the New Import Process is to be implemented in form and time. In an analysis published in November by the trade group representing the petrochemicals-intensive machinery and equipment sector, Abimaq, the savings for companies under the new system, when fully implemented, was estimated at Brazilian reais (R) 40 billion ($6.8 billion) annually. The savings would come from nearly halving delivery times under the new and more electronic-based system, with the current average of nine days potentially falling to five days. In a written response to ICIS this week, Abiquim said its member companies have so far been spared from a direct hit to their logistics but showed worries that any strike extension going forward could greatly change the picture. “At the moment, we still don’t have data on the number of records of time-consuming import operations, or volumes in tonnes, that could support a more quantitative assessment,” said a spokesperson for the trade group. “What we currently have is more a qualitative concern that the strike extension could impact the implementation of the New Import Process on the Single Foreign Trade Portal, since associated companies are already preparing to process the records in the new model.” Abiplast, the trade group representing plastic transformers, a highly import-dependant sector, said its member companies have so far only reported anecdotal evidence of disruption in non-core business operations, such as the delivery of samples for trade fairs and the like. “However, we may be facing more trouble soon [if the strike extends further]. For now, we have had trouble sending samples for trade fairs or samples for future sales, for example, so that the products can be tested abroad – most of those sending samples have reported a lot of problems to do so,” said Roriz in note sent to ICIS. Finally, a source at Brazil's chemicals distributor Activas said the company has not experienced any significant trouble when importing product. Front page picture: The Port of Santos in Sao Paulo state Picture source: Santos Port Authority  Insight by Jonathan Lopez

28-Feb-2025